If you win a lottery jackpot, you will probably be in a maze of confusion and possibly shock. As a winner, you must stay calm and think clearly. Remember that any wrong decision you make will have a detrimental effect on the rest of your life.
Depending on the rules of your lottery, you have 3 months to 1 year to claim your grand prize. There is no need to rush. Take your time, so relax.
Here are some quick and simple suggestions:
- Protect your ticket and keep quiet.
- Do nothing for a while.
- Organize a group of professionals to manage the claim for you.
That’s it—three simple steps.
Let’s talk about each step in detail.
Table of Contents
First Thing To Do If You Win a Lottery Jackpot
First, ensure your signature is on the back of the ticket. If you haven’t signed it yet, do so immediately. But remember to leave extra room above the ticket. A lottery lawyer has a good explanation for why that extra space is so important.1
Once signed, go to the bank and store your ticket in a safety deposit box.
And then keep quiet about it.2
As soon as the news spreads about your fortune, expect things to not be the same in your life in the next couple of days. It’s dangerous, too.
The last thing you want to do is to clamor for your privacy and safety.
Now, protecting the ticket might not only involve putting your signature on it. You should handle the ticket carefully after the retailer hands it to you.
After all, any ticket is a potential winning ticket. Thus, make sure that you store it properly so that it will not get crumpled, wet, torn, or exposed to heat and mutilated.
Lottery officials in different places might have different guidelines on ticket validation. Yet, it is best to keep a ticket in good condition.
Few people know it, but lottery tickets might be made of thermal paper. Thus, exposure to heat might erase the important details on the ticket, such as what happened to Antonio Mendoza.3 He allegedly won the lotto jackpot, but certain circumstances compromised the physical state of his tickets. He was fortunate to win but unfortunate to claim his prize because of the compromised physical ticket. Ensure this situation doesn’t happen if you win a lottery game.
Stop Thinking About Claiming Your Prize for a While
Remember, you are still in a state of shock. It’s best that you do nothing at this point.
I do not know you, but I recommend filing a leave of absence if you think it will be difficult to focus on your work when you think about your fortune.
Get off work for a while. Then, do a simple activity to preoccupy your mind, such as fishing, a movie marathon, a cooking marathon, gardening, lawn mowing, or bodybuilding.
But if it is possible, continue going to work. Do your job as usual like it’s a regular day.
And during your spare time, find someone who can help you. And that’s the topic we will discuss next.
Hire Competent Professionals
For this, you may need to take time off work to focus on finding the best professionals.
When I say professionals, I mean certified ones. I am not talking about people from your neighborhood who know a thing or two about bookkeeping.
Get three key people on your team. A lawyer, a CPA, and a fee-based financial planner. Those are the minimum. The bigger the prize, the more it is necessary to get certified professionals to help you.
These professionals will make a plan to keep you anonymous when you claim the prize. Take a look at what Deborah Jacobs of Forbes says in her article:
Rules on winner publicity vary by state. In New York, for example, winners’ names are a public record. Elsewhere it may be possible to maintain your anonymity by setting up a trust or limited liability company to receive the winnings, says Beth C. Gamel, a CPA with Pillar Financial Advisors in Waltham, MA. A client of Gamel’s who won a past lottery did that, and had a lawyer claim the prize on behalf of the trust. In South Carolina, it’s also possible to remain anonymous.4
But more than the anonymity issue, these professionals will ensure that your newfound fortune does not go to waste.
Follow a Simple Plan if You Win a Lottery
Here is a list of professional advisers with a proven track record of successfully managing sudden windfall, such as if you win a lottery jackpot. This list should give you an idea of who to ask for.
Hire some professionals, then meet them up together to discuss the following:
- The best way to claim your prize. Whether through a trust fund, an LLC, or any other entity. Know what’s possible under your current law.
- Discuss the pros and cons of going lump sum or the annuity.
- Discuss the legal implications of your lottery windfall to your current situation. For instance, are you separated but not divorced? You should discuss the situation with your team. Rules differ from country to country and from state to state. In the UK, for example, spouses have no right to lottery winnings.5
- Professional fee: Discuss how each team member will be paid to clarify everything.
- Best of all, discuss how your team will invest the money for maximum returns.6
With your team, it’s essential to secure the following:
- Documents and necessary agreements
- A hard copy of the final plan. Make sure that each member of the team has a copy of it.
- The spokesperson for the media group. You must assign one.
One good thing about hiring professionals is that you don’t have to tell anyone you are a lottery winner; you can say you are part of an entity.
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Once a plan is created, implement everything according to plan.
Enjoy your life and your wealth, and remember to stay humble.
Best of all, love your family, give something back to the community, and be thankful for what you have, no matter how small or big.
Also, the news about your winning will inevitably reach your relatives and acquaintances. Therefore, many of them can approach you and ask for money.
While it is okay to help, remember there is always a limit to everything. Whatever financial help you want to give, always discuss it first with your accountant.
The professional could also advise you about the tax repercussions of sharing your winnings with family or friends. In the USA, for example, there is a gift tax that can guide lotto winners in how much they can give away to loved ones.7
Another way to protect your winnings is to plan how to live with it. It is common to read about stories of winners who had the misfortune of losing all they had after winning.
If you win a lottery jackpot, you can decide what you want to do with your money. Still, would it be better to live long and comfortably than eventually file for bankruptcy because you wasted your fortune?
Explore more:
References
- A Lottery Lawyer Explains What You Should Do if You Hit the Jackpot [↩]
- 12 things not to do if you win the lottery [↩]
- The importance of following Lotto-ticket guidelines [↩]
- 10 Things To Do When You Win The Lottery [↩]
- Spouses have no right to lottery winnings [↩]
- Achieve Financial Independence Easily Through Index Funds [↩]
- IRS Announces Higher Estate and Gift Tax Rates for 2021 [↩]